Hmmm! Not sure myself? There are quite different effects the internet has had.
The toy sector of the model train market was already in free fall long before the internet really took off. Long ago they used to say every young boy got at least one train set as a Christmas or birthday present before they were 14, but that is all gone, it became commodore 64, Atari, then Nintendo, gameboys, playstations, computers, etc, and now smartphones and tablets that children stare at. And more recently our young spend more time with the internet's social networking and watching Netflix than letting their imagination run wild on imaginary battle fields with toy soldiers and tanks, dog fights with airfix, or interstellar space ship attacks. Now they watch instead of making up their own plots by hand.
Most don't use their hands to 'play' or build and interact with physical toys as much, the imagination has been replaced by the dance of LCD screens, hence lego, meccano, kicking a football outside, climbing trees, and model trains are gone by the wayside. The hobby is now mainly the preserve of 'dads' who used to play with toy trains when they were youngsters before LCDitis struck the world. Hence it is now more of a modellers market, with the number of toy retailers supplying model trains reduced due to the exodus of children from the market. Hence a smaller number of high quality retailers specialising in various facet's of modelling products and services. Sure the internet must have had an effect on those retailers that did not compete on price, but modellers are more discerning and price wise than the mass toy market, and it seems that the savvy retailers have found a number of ways to compete. Looking at rows and rows of well displayed models in a retail store combined with the ability to view and handle products is still a draw for some, even if they only buy X% in store and Y% online. As ever with retail, its the extra odds'n'ends that folks often buy when purchasing a larger item that can have more attractive margins.
But the main reason we have less model shops, is far fewer little boys get train sets for birthdays and Christmas anymore. It's simply become a smaller and more specialised market for an older age profile.